German consumer confidence to rebound in Nov.: GfK

EmeseBartha

FRANKFURT--German consumer confidence is expected to rebound in November, a sentiment survey released Friday showed, signaling that citizens of Europe's largest economy have become less sensitive to conflicts across the globe and their impact on economic growth.

The monthly survey of the GfK market research group shows consumer confidence rising to 8.5 points for November from an upwardly revised 8.4 points in October. The first estimate for October was 8.3 points. Economists polled by The Wall Street Journal were much gloomier, predicting the November figure to fall to 8.0 points.

"In October, German consumers were evidently less affected by the continued problematic geopolitical situation and the resultant economic slowdown than they had been in the previous month," GfK said.

GfK uses survey data from the current month to derive a figure for the month to come.

A recent set of economic indicators have sparked worries among economists and policy makers that Germany's economy might slow down. Given that Germany has been the main driver of eurozone growth through much of the recovery from the financial crisis, a sharp slowdown of growth, or entry into recession, would significantly undermine economic prospects in the 18-nation eurozone.

The German government recently cut its growth outlook for both 2014 and 2015. Still some data remain promising. Unemployment remains near record lows, while incomes are rising and borrowing costs are historically low.

GfK said that consumers' economic expectations stabilized in October, falling only 0.1 point to 4.3, after two months of sharper declines. In August, this sub-index suffered its sharpest decline since the survey began in 1980 with a dramatic 35.5-point plunge to 10.4 points, followed by a more moderate fall in September.

Income expectations and a willingness to buy increased slightly in October, the survey said, helped by the stable situation on the German labor market. GfK said the labor market should stay this way at least in the short term.

Experts say that despite some alarming data released earlier this month, the outlook for the country isn't that bad.

"In our view, the state of the German economy is not as bad as disappointing August data and recent sentiment declines made some people believe," said ING Bank's economist Carsten Brzeski, adding that the strong labor market, solid private consumption and a recovery of foreign demand on the back of a weaker euro should support the economy in the final quarter of the year.

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